§ 27-1-3.5-12.3 — Internal audit function

Indiana § 27-1-3.5-12.3

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 3.5: Annual Audited Financial Reports

Text

3. (a) This section does not apply to a
domestic insurer that meets the following requirements:
(1) The domestic insurer has annual direct written and
unaffiliated assumed premiums (including international direct and
assumed premiums and excluding premiums reinsured with the
Federal Crop Insurance Corporation and Federal Flood Program)
of less than five hundred million dollars ($500,000,000).
(2) If the domestic insurer is a member of a group of insurers, the
group has annual direct written and unaffiliated assumed
premiums (including international direct and assumed premiums
and excluding premiums reinsured with the Federal Crop
Insurance Corporation and Federal Flood Program) of less than
one billion dollars ($1,000,000,000).
A domestic insurer or group of insurers described in this subsection
shall comply with the requirements of this section not later than one (1)
year after the year in which the domestic insurer's or group's annual
direct written and unaffiliated assumed premiums described in
subdivisions (1) and (2) exceed the applicable maximum amount
specified in subdivision (1) or (2).
(b) A domestic insurer shall establish an internal audit function to:
(1) provide independent, objective, and reasonable assurance to
the domestic insurer's audit committee and management
concerning the domestic insurer's governance, risk management,
and internal controls;
(2) perform general and specific audits, reviews, and tests; and
(3) use other techniques considered necessary to protect assets,
evaluate control effectiveness and efficiency, and evaluate
compliance with policies and regulations.
(c) An internal audit function established under subsection (b) must
be organizationally independent, as follows:
(1) Ultimate judgment concerning audit matters must be made by
the department responsible for the internal audit function.
(2) The department responsible for the internal audit function
shall appoint an individual:
(A) to be responsible for the internal audit function; and
(B) to have direct and unrestricted access to the board of
directors of the domestic insurer.
The internal audit function's organizational independence does not
preclude dual reporting relationships.
(d) The director of the internal audit function shall report to the
audit committee of a domestic insurer on a regular basis, at least
annually, concerning the following:
(1) The internal audit function's periodic audit plan.
(2) Factors that may adversely affect the internal audit function's
independence or effectiveness.
(3) Material findings from completed audits.
(4) The appropriateness of corrective actions implemented by
management as a result of audit findings.
(e) If a domestic insurer is a member of an insurance holding
company system or a member of a group of insurers, the domestic
insurer may satisfy the internal audit function requirements of this
section at the ultimate controlling person level, an intermediate holding
company level, or an individual legal entity level.

Legislative History

As added by P.L.146-2015, SEC.17. Amended by P.L.72-2016, SEC.7.